Hi all
I have uploaded a pdf file documenting the derivation of an Erceg et al (2000) Calvo style Wage Phillips curve in a stochastic growth model with distortionary taxes. I derive the optimality conditions, stationarize the non-stationary variables and log-linearize the model. I have not described each step of the derivation using text but the algebra is quite detailed.
It may be useful for researchers working with log-linearized DSGE models along the lines of Smets and Wouters (2007, 2003) and Justiniano, Primiceri and Tambalotti (2011,2010). I introduce time-varying distortionary taxes that change the marginal rate of substitution between consumption and leisure.
punnoosejacob.com/research/notes/
Please email me at punnoosejacob@yahoo.com if you find any errors.
cheers
Reuben